TaxTMI 
TaxTMI 
2021 (4) TMI 224
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....7 by issuing impugned notice dated 31.03.2019 under Section 148 of the Act. 2.3 At the request of the writ applicant, reasons recorded have been furnished to the writ applicant on 17.05.2019, which reads as under : "2. In this connection, reason for re­opening of the case for A.Y. 2012­13 are as under 1. The assessee company filed its Return of Income for the A.Y. 2012­13 on 25.09.2012 declaring total income at Rs. 7,58,720/­ Assessment in the case of the assessee was completed u/s 143(3) on 31.03.2014. 2. In this case, an information has been received from O/o the DDIT(Inv.), Unit­2, Surat through email on 22.03.2019, related to inquiry report in the case of Shri Afroz Mohd. Hasanfatta and group. In this case, Enforcement Directorate (ED) received information through Customs Department Surat that some of the companies opened their bank accounts with ICICI Bank Surat and used their accounts for making foreign remittances against fake import documents. The ED conducted investigation and filed a charge sheet against some persons on 18.07.2014 and later on a supplementary chargesheet was filed on 18.07.2014 before the Special Court under the Prevention of Mo....
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....n made by the Income Tax Deptt. which proved that the entire movement of funds was for the illegal purpose of money laundering. 4. In all, this money laundering scam is known as Afroze Mohd. Hasanfatta group scam. Several entities were traced related to this group on the basis funds trail, which were used as a conduit for channelizing funds to various concerns, ultimate beneficiaries of which were Hong Kong and Dubai based entities, to which the funds were transferred on the fake documents. 5. The detailed information so received from the Investigation Wing, Surat has been perused carefully and it is found that the assessee company is one of the concerns which has provided entry of funds to the below: mentioned entities operated by Shri Afroz Fatta during the F.Y. 2011­12 relevant to A.Y.2012­13: Sr.No. Parties Name Target entities Amount of transaction (in crore) 1 M/s. Nisha Diamond Pvt. Ltd M/s. Agni Gems Pvt. Ltd 10.13 Total 10.13 6. The above information received from the investigation Wing has been analysed along with the case records available in the case of the assessee company. On perusal of assessment records in the case of the asse....
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....ns of Explanation 1 of section 147 of the Act. Further, this case is being analysed now on the basis of fresh material which was not available with the Assessing Officer at the time of assessment. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby reopening u/s. 147 of the Act. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from Principal Commissioner of Income Tax as per the provisions of section 151 of the Act. 3. In view of the judgment of Hon'ble GHC in the case of Sahkari Khand Udhyog Mandal Ltd., it is expected from you to put your say, if any, within 60 days of receipt of this letter containing reasons of re­opening in your case. i) Once the Assessing Officer serves to an assessee a notice of reopening of assessment section 148 of the Income­tax Act, 1961, and within the time permitted in such notice, the assessee files his return of income in response to such notice, the Assessing Officer shall supply the rea....
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....cate appearing for the writ applicant and Mrs. Kalpana K. Raval, the learned Standing Counsel appearing for the revenue. 5. Mr. Sunit Shah, the learned Senior Counsel appearing for the writ applicant raised the following contentions: 5.1 There was full and true disclosure by the writ applicant during the course of filing of return as well as original assessment framed under Section 143(3) and therefore, there was no false or untrue declaration by the writ applicant on any of the issues on which the reopening is sought to be initiated. 5.2 It was submitted that the respondent authority failed to comply with the provisions of Section 148(2) of the Act, as before issuing the notice, the Assessing Officer should record his reasons for reopening of the assessment. Referring to the letter, the learned counsel invited the attention of this Court that no date being mentioned on the reasons recorded, which evident that reasons for issuing notice under Section 148 of the Act were not recorded before issuing the notice and therefore, notice lacks validity. 5.3 It was further pointed out that, in the present case, the reopening of the assessment is beyond the period of 4 years and in that ....
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....nd by the Assessing Officer to arrive at the conclusion that the income chargeable to tax has escaped assessment. Therefore, reopening based on the third party satisfaction cannot be sustained in law and the proceedings initiated on borrowed satisfaction required to be quashed and set aside. 6. In view of the aforesaid contention, the learned counsel for the writ application submitted that, the impugned notice as well as the order of disposing off the objections are bad, illegal and without jurisdiction and therefore, the same deserve to be quashed and set aside and accordingly, the writ application may be allowed. 7. On the other hand, Mrs. Kalpana K. Raval, learned Standing Counsel appearing for the revenue has vehemently opposed the writ application, contending that, in the present case, subsequent to the scrutiny assessment, the Assessing Officer has received the information from the Investigating Wing Surat that the assessee company entered into transaction with M/s. Agni Gems Pvt. Ltd amounting to Rs. 4,57,48,000/­ and total transactions worked out by the Investigation wing of Rs. 10,13,00,000/­ which prima­facie appears to be an accommodation entries which was ....
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....shy; was the reason for reopening of the assessment for the year under consideration. 12. A plain reading of the reasons recorded as indicated above, emerge that the Assessing Officer had received inquiry report in relation to Mr. Afroze Mohd. Hasanfatta and Mr. Madan Jain, who made foreign remittances through 12 different companies, controlled and supervised by them and there involvement in money laundering was detected. As per the report, out of 12 companies, one of the concerned was M/s. Agni Gems Pvt. Ltd., who made transactions either directly or in circular manner, without any import from the other countries and money circulated outside India. The Assessing Officer noticed that the crores of rupees were remitted in UAE and Hongkong on the basis of forged bill of entry through the bank accounts of 12 companies. The Assessing Officer has noted that the ED busted multicrore havala racket during the search operation at the several places and found that Mr. Afroze Mohd. Hasanfatta and their group, instead of importing diamonds, they made bogus import bills, claiming that they have purchased the diamonds from foreign traders and by using this bogus bills, money was routed through ....
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.... same was thoroughly examined by the Assessing Officer and in this circumstances, when there was no concealment or suppression of any facts, the reopening beyond 4 years in the absence of any non­disclosure of material facts cannot be permitted. 17. We do not agree with the above contention mainly on the ground that during the course of previous assessment proceedings, the assessee failed to disclose material particulars with regard to alleged transactions and the true facts of the transactions having been discovered by the Assessing Officer on the basis of the information received from the concerned department. Law in this regard has been settled by various decisions of this Court as well as the Apex Court that burden is on the assessee to make true and full disclosure. Therefore, where the transaction itself on the basis of the subsequent information is found to be a bogus transactions, mere a disclosure of said transaction at the time of original proceedings, cannot be said to be a disclosure of "true and full" facts in the case. In this context, we may refer and rely on the observations made by the Apex Court in the case of Phoolchand Bajranglal and another Vs. ITO (2001) ....
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....l assessment proceedings, the reassessment could not be held unjustified. 20. In Aaspas Multimedia Ltd. VS DCIT (2017) 78 taxmann.com, this Court while examining the validity of the notice, held that where assessment was made on the basis of information received from the Principal DIT, (Investigation), that assessee was beneficiary of accommodation entry by way of share application provided by a third party, same was justified. 21. In the case of Jayant Security Finance Ltd Vs. Asst. CIT (2018) 91, taxmann.com, this Court held that the information from the investigation wing stating that the loan from the company working as an entry operator and earning bogus firms to provide advances to various persons was sufficient and would constitute genuine and bonafide reason to believe. 22. In view of the law laid down by this Court as well as the Apex Court and considering the facts of the present case, we are of the view that, the assessee was aware that the transaction with M/s. Agni Pvt Ltd was not business transaction but in the form of bogus purchase, it was only an accommodation entries and the company was one of the beneficiaries of the transactions, despite of this, the assessee....
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....order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. 10. In case of Central Provinces Manganese Ore Co. Ltd. v. Income Tax Officer, Nagpur (supra) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically undervoicing the value of Manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had under­voiced goods during export. Under such circumstances, upholding the validity of the notice for reopening,....
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....Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs." 12. In case of Income Tax Officer v. Selected Dalurband Coal Co. Pvt. Ltd.(supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of re­opening of assessment, the Supreme Court held and observed as under: "After hearing the ....
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....ntered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs. 27 lakhs mentioned in the table in Annexure P­2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific information received from the office of the DIT (INV­V) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the....